1 Unless otherwise indicated, all subsequent section

references are to the Internal Revenue Code in effect for the

taxable years in issue.

T.C. Summary Opinion 2007-60

UNITED STATES TAX COURT

MANUEL AYALA, JR., AND CAROL A. AYALA, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5395-06S. Filed April 23, 2007.

Manuel Ayala, Jr., pro se.

Derek W. Kaczmarek, for respondent.

ARMEN, Special Trial Judge: This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.1 Pursuant to section

7463(b), the decision to be entered is not reviewable by any
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other court, and this opinion shall not be treated as precedent

for any other case.

Manuel Ayala, Jr., and Carol A. Ayala (collectively,

petitioners) received a notice of deficiency in which respondent

determined: (1) Deficiencies in income taxes for 2002, 2003, and

2004 of $2,295, $4,050, and $4,459, respectively, and (2)

accuracy-related penalties under section 6662(a) for negligence

or intentional disregard of rules or regulations of $459, $810,

and $891.80, respectively. The basis for the deficiency

determination was the denial of deductions claimed by petitioners

for travel expenses under section 162(a)(2). We are asked to

decide whether petitioners may deduct those expenses. This

requires that we decide whether petitioners were “away from home”

when they incurred the expenses. If we sustain respondent’s

determination, we are also asked to decide whether petitioners

are liable for the accuracy-related penalties. 

Background

Some of the facts have been stipulated, and they are so

found. We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.

Petitioners listed their mailing address on their petition

as Las Vegas, Nevada. Mr. Ayala testified at trial that

petitioners’ permanent mailing address is Rocklin, California. 
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Mr. Ayala is employed by Sheehan Pipeline Construction

Company (Sheehan) as a project safety coordinator, and he travels

from one project to another, all over the country, ensuring

compliance with health and safety regulations. When one project

is completed, he is usually assigned a new project immediately. 

Projects can last anywhere from a few months to a couple of

years. 

During the years at issue, Mr. Ayala worked on several backto-back projects. During this period, petitioners lived in a

travel trailer, and they traveled together from one job site to

the next. In their own words, they were “gypsies”. Although Mr.

Ayala was paid a per diem while working onsite, it did not

completely cover the travel expenses that were actually incurred. 

Petitioners bought their home on wheels, the travel trailer,

in Nevada; they registered the vehicle there out of convenience. 

Because they moved frequently and had to receive their mail

somewhere, petitioners used a mail service in Las Vegas that

provided them with a mailing address. They obtained Nevada

licenses, and later, when they purchased a truck, they registered

the truck in Nevada.

As petitioners do not own a residence for their own use

aside from the travel trailer, they consider Mr. Ayala’s

ancestral home in Vallejo, California, to be their “real” home. 
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2 During these periods, Mrs. Ayala usually stays in the

trailer to care for petitioners’ pets, and Mr. Ayala tries to

stay in the house in Vallejo with his disabled sister.

3 Petitioners also do not vote in Nevada as they are not

considered legal residents for voting purposes.

The ancestral home in Vallejo was purchased by Mr. Ayala’s

father in 1953, and it is both the home in which Mr. Ayala grew 

up and the home in which his disabled sister has resided for a

number of years. Mr. Ayala and his siblings own the home. 

Petitioners have other ties to California. They grew up in

Vallejo, and their son was born there. In addition, their

daughter and grandchildren live in the Sacramento area. When

petitioners are not on the road for Sheehan, they visit

California, setting up their trailer near Sacramento and

commuting back and forth to Vallejo as needed to assist with the

care of Mr. Ayala’s disabled sister.2 However, petitioners do not

file California State income tax returns or pay California State

income tax unless Mr. Ayala has had California-source income from

his employment with Sheehan. In addition, petitioners do not

vote in California.3

Petitioners financially assist with the support of Mr.

Ayala’s disabled sister. Sometimes petitioners pay her water and

trash collection bills, and sometimes they pay the property taxes

on the home in Vallejo so that Mr. Ayala’s sister might continue 
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4 Given the manner in which these issues were presented to

the Court, we make our decision as to both the deficiencies and

additions to tax without regard to the various burdens of proof

under sec. 7491.

to live there without interruption of services or imposition of

property-tax liens.

Petitioners and respondent primarily disagree on whether 

the house in Vallejo, California, is petitioners’ “tax home” and

consequently, whether petitioners’ expenses incurred while

working onsite for Sheehan are deductible under section 162(a)(2)

as expenses incurred in pursuit of a trade or business while away

from home.

Discussion4

A. Section 162(a)(2)

Generally, outlays for food and shelter are considered

personal expenses and are not deductible. Sec. 262. However,

section 162(a)(2) allows a deduction for traveling expenses,

including amounts expended for meals and lodging, if the expenses

are: (1) Ordinary and necessary, (2) incurred while “away from

home”, and (3) incurred in pursuit of a trade or business. See

Bochner v. Commissioner, 67 T.C. 824, 827 (1977). Respondent

contends that petitioners were not “away from home” when they

incurred the expenses, and thus that petitioners do not satisfy 
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5 During the years in issue, only Mr. Ayala was employed by

Sheehan, so only his travel expenses are potentially deductible

as business expenses under sec. 162(a)(2). However, given the

nature of the substantive issue presented by respondent’s

deficiency determination and the manner in which we decide that

issue, we need not consider any allocation of expense between Mr.

and Mrs. Ayala. Accordingly, for convenience, our discussion is

generally cast in terms of petitioners’ tax home rather than just

Mr. Ayala’s.

the second factor for deductibility of the expenses claimed on

their returns for the years in issue.5

As a general rule, a taxpayer’s principal place of

employment is the taxpayer’s “tax home”. Kroll v. Commissioner,

49 T.C. 557, 561-562 (1968). An employee without a principal

place of business may treat a permanent place of residence at

which the employee incurs substantial continuing living expenses

as his or her tax home. Weidekamp v. Commissioner, 29 T.C. 16,

21 (1957). Where “the taxpayer has neither a principal place of

business nor a permanent residence, he has no tax home from which

he can be away. His home is wherever he happens to be.” Barone

v. Commissioner, 85 T.C. 462, 465 (1985), affd. without published

opinion 807 F.2d 177 (9th Cir. 1986).

Although the subjective intent of a taxpayer is to be

considered in determining whether the taxpayer has a tax home,

for purposes of section 162(a)(2), this Court and others have

consistently focused more on objective criteria. Section

162(a)(2) is intended to mitigate the burden of a taxpayer who,

because of the travel requirements of his or her trade or
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business, must maintain two places of abode and, therefore, incur

additional living expenses. Brandl v. Commissioner, 513 F.2d

697, 699 (6th Cir. 1975), affg. T.C. Memo. 1974-160; Kroll v.

Commissioner, supra at 562. In other words, section 162(a)(2) is

intended to provide relief to a taxpayer who incurs “substantial

continuing expenses” of a home that are duplicated by business

travel. See James v. United States, 308 F.2d 204, 207-208 (9th

Cir. 1962); Kroll v. Commissioner, supra at 562. When a taxpayer

continuously travels for work and does not have substantial,

duplicative, continuous living expenses for a permanent home

maintained for some business reason, the taxpayer has no tax

home. Henderson v. Commissioner, 143 F.3d 497, 499 (9th Cir.

1998), affg. T.C. Memo. 1995-559; James v. United States, supra.

Most significantly in this case, petitioners bore no

expenses in maintaining a home in addition to their travel

trailer. Notwithstanding their very real ties to California,

petitioners bore no duplicative living expenses. They did not

make mortgage payments, pay regular utilities costs, or regularly

pay for running a household other than the one in which they

resided: The travel trailer. In other words, expenses incurred

in respect of the ancestral home in Vallejo were incurred for the

benefit of Mr. Ayala’s sister and not because of the exigencies

of Mr. Ayala’s business travel. Make no mistake: Petitioners’

financial support of Mr. Ayala’s sister was extremely laudable. 
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However, those financial outlays were not of the type considered

to be costs of maintaining a home such that the expenses related

to petitioners’ life on the road for Sheehan would be redundant. 

Petitioners were not “away from home” within the intent and

meaning of section 162(a)(2) for the taxable years at issue

because they had no “home” to be away from. Barone v.

Commissioner, supra at 465; Wirth v. Commissioner, 61 T.C. 855,

858-859 (1974). In short, petitioners’ tax home was wherever

they happened to be. See Brandl v. Commissioner, supra. 

Accordingly, petitioners are not entitled to deduct the expenses

claimed on their returns for the years at issue.

B. Section 6662(a)

Section 6662(a) imposes a penalty equal to 20 percent of the

amount of any underpayment attributable to negligence or

disregard of the rules or regulations. Sec. 6662(b)(1). 

“‘[N]egligence’ includes any failure to make a reasonable attempt

to comply with the [Internal Revenue Code], and the term

‘disregard’ includes any careless, reckless, or intentional

disregard.” Sec. 6662(c). 

In view of the factual uncertainties presented in this case,

as well as Mr. Ayala’s forthright and very credible testimony, we

are convinced that petitioners operated in good faith and that

the reasonable cause and good faith provisions of section
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6664(c)(1) are applicable here. We therefore decide in favor of

petitioners on this issue.

C. Conclusion

In closing, we think it appropriate to observe that we found

petitioners to be very conscientious taxpayers who take their tax

responsibilities seriously. Mr. Ayala’s testimony was

straightforward and credible. The Tax Court, however, is a court

of limited jurisdiction and lacks general equitable powers. 

Commissioner v. McCoy, 484 U.S. 3, 7 (1987); Hays Corp. v.

Commissioner, 40 T.C. 436, 442-443 (1963), affd. 331 F.2d 422

(7th Cir. 1964). Consequently, our jurisdiction to grant

equitable relief is limited. Woods v. Commissioner, 92 T.C. 776,

784-787 (1989); Estate of Rosenberg v. Commissioner, 73 T.C.

1014, 1017-1018 (1980). Therefore, we must find that

petitioners’ ancestral home in Vallejo was not their tax home for

Federal tax purposes during the years in issue. Rather, their

tax home was wherever petitioners happened to be, and

consequently, they had no home from which to be away for purposes

of claiming deductions for travel expenses under section

162(a)(2).
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To reflect our disposition of the disputed issues,

Decision will be entered

for respondent as to the

deficiencies in income taxes and

for petitioners as to the accuracyrelated penalties.